Extra 300,000 people projected to fall into absolute poverty in 2024-25

The Resolution Foundation projects that an extra 300,000 people will fall into absolute poverty in 2024-25, according to its Living Standards Outlook summer 2023 update published on 6 September 2023¹. The think tank also projects zero real growth for median non-pensioner household income in the 2024-25 election year¹.

With zero growth also projected for 2023-24 and 2025-26, the foundation describes this as a three-year stagnation, following a sharp income fall in 2022-23¹. For the lower-income half of the non-pensioner population, 2024-25 is projected to bring a 1 per cent real income hit overall¹.

The report also sets out projections for savings interest and mortgage costs. It estimates that total interest on bank accounts, cash ISAs and other savings will reach £90 billion in 2024-25, or over £3,000 per household, up from just £5 billion in 2021-22¹. It says around half of the mortgage cost rise is still to come, while around 90 per cent will have fed through by the fourth quarter of 2024¹.

That interest income is projected to be concentrated. The tenth of households with the most savings wealth will account for two thirds (65 per cent, or around £60 billion) of savings interest in 2024-25, receiving an average of £20,000 each before tax, while the half of households with the lowest savings will receive only 2 per cent of total interest income, or around £100 each on average¹. Households aged 65-74 will gain six times as much on average as those under 35¹.

"An extra 300,000 people are projected to fall into absolute poverty next year"

Resolution Foundation, The Living Standards Outlook - Summer 2023 Update¹

Measure	Projection for 2024-25
Median non-pensioner household income	Zero real growth¹
Lower-income half of non-pensioner population	1 per cent real income hit¹
People falling into absolute poverty	Extra 300,000¹
Total savings interest	£90 billion, or over £3,000 per household¹
Share of savings interest going to top tenth of households by savings wealth	65 per cent, around £60 billion¹

Why it matters for households

The projections cover the 2024-25 financial year, which the foundation identifies as an election year¹. For households whose income comes mainly from work or benefits rather than savings, the report projects no real terms growth in the median non-pensioner income across three consecutive years, and a 1 per cent real fall for the lower-income half of that population¹. The 300,000 additional people projected to fall into absolute poverty would do so next year¹.

For households with mortgages, the report says around half of the rise in mortgage costs is still to come, with around 90 per cent fed through by the fourth quarter of 2024¹. That means a substantial part of the increase in repayments is projected to arrive during the same period in which incomes are projected to be flat.

Savings interest is projected to be unevenly distributed. The £90 billion total for 2024-25 works out at over £3,000 per household on average, but the half of households with the lowest savings are projected to receive around £100 each on average, while the top tenth by savings wealth receive an average of £20,000 each before tax¹. The report gives no breakdown of these figures by nation or region, and no separate projections for pensioner households.

What happens next

The report sets out projections rather than announced policy changes, and no implementation dates are given beyond the financial years and quarters cited¹. The foundation's figures for 2024-25 are projections made in September 2023, and it has not reported any subsequent revision in the material published at that date¹.

Sources1 cited